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Suppose that we invest in a bond with a 3 - year horizon . We consider purchasing a bond with the face value of $1 , 000 , the maturity of 20 years ,...
What is the RoR of this bond? Could you help me this problem? Thanks
Suppose that we invest in a bond with a 3 - year horizon . We consider purchasing abond with the face value of $1 , 000 , the maturity of 20 years , and the coupon rate of8%/6 . The bond pays the coupons semi - annually . The price of the bond is $907. 99 andthe YTM is 9%6 . We expect that we can reinvest the coupon payments at an annual rateof 6%6 . At the end of the horizon , the 17 - year bond will be selling to offer a YTM of10%6 . What is the total return ( FOR) of this bond ?